- Title: With buyers wary, Argentina's zombie mortgage market has a long road to revival
- Date: 16th July 2024
- Summary: BUENOS AIRES, ARGENTINA (FILE – FEBRUARY 4, 2002) (ORIGINALLY 4:3) (REUTERS) PEOPLE WALKING DOWN THE STREET VARIOUS OF PEOPLE THAT SAVED IN DOLLARS PROTESTING AGAINST THEIR SAVINGS BEING TRANSFERRED INTO PESOS, BANGING ON IRON SHUTTERS OF CITIBANK BANK BANNER MADE WITH CARDBOARD AND PAPER PROTESTING AGAINST TRANSFER OF SAVINGS INTO PESOS READING (Spanish): ‘BOSTON BANK: TH
- Embargoed: 30th July 2024 11:10
- Keywords: appartments broker buildings economic crisis economy homes inflation mortgages
- Location: BUENOS AIRES, ARGENTINA
- City: BUENOS AIRES, ARGENTINA
- Country: Argentina
- Topics: South America / Central America,Government/Politics
- Reuters ID: LVA004912815072024RP1
- Aspect Ratio: 16:9
- Story Text: In Argentina, real estate agents have one key piece of advice for potential home buyers: bring cash, big bags of it.
Pro-free-market President Javier Milei is trying to fix the South American country's economy after years of crisis and high inflation. Part of his solution is to encourage banks to revive the moribund local mortgage market.
But buyers and real estate agents say that won't be easy. Argentina's mortgage market is tiny, less than 1% of the country's GDP versus around 30% in Chile, 10-15% in Brazil and Mexico, and 15% in the U.S. Regular cycles of economic uncertainty mean borrowers - and lenders - fear the risk of long-term credit.
"People buying properties in Argentina come with cash, in a backpack or a bag," said Juan Verzero, owner of Buenos Aires broker Succeso Propiedades.
Typically, he said, sellers and buyers get together in locations such as shops or offices to sign the contract, exchange keys, and hand over cash, usually in dollars to defuse inflation and devaluation fears - counting it out on the spot.
In an attempt to tap into middle-class dreams of home ownership, there have been new mortgage launches this year. Local banks Banco Nacion and Banco Galicia pledged billions of dollars of mortgage loans, adding 4.5%-8% interest on top of an official inflation-linked index.
Argentina's economic track record doesn't help. The country has registered nine sovereign debt defaults, the most recent in 2020, which has left it largely cut off from foreign capital markets. In 2001, the government froze bank withdrawals after a then world-record debt default, leaving many to watch the value of their savings evaporate as the peso plunged and sparking sometimes violent protests.
Sandra Kattan, a 61-year-old teacher, managed to get on the property ladder with a credit card and some dollar savings.
With her husband, they purchased land in Moreno, a Buenos Aires neighborhood, paying around $30,000 upfront in dollar savings, raising more money by selling their car and truck. In 2017, they used a credit card to pay for materials to start building and paid workers with Kattan's teaching salary.
"Mortgages that existed were too expensive for us, it was inaccessible," she said. "We were a little afraid of bank loans... We were afraid of inflation."
Argentina's government has cited the return of mortgage products as a signal of support for Milei's pro-market reforms. He wants to deregulate the economy, reduce state interventions and slash public spending to bring down inflation.
(Production: Horacio Soria, Juan Bustamante, Nina Lopez) - Copyright Holder: FILE REUTERS (CAN SELL)
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